Some of you may have heard us talk about the long and short. It’s how we look at balancing long-term brand and business objectives versus short-term sales activations.
The general rule of thumb is to spend 60% of the marketing budget on long-term brand building and 40% on short-term sales activations. Generally speaking, on any timescale longer than 12-18 months, this mix will produce greater returns from your advertising spend.
There are exceptions, though.
If you’re a brand new business, you probably can’t afford to spend 60% of your meager marketing budget on things that won’t produce a short-term return. (Unless you’re a well-capitalized start-up with a solid marketing plan.) You’re going to need to spend the money on things that will get you customers as soon as possible. Therefore you lean more heavily on the short-term activations.
For certain industries like banking and telecoms, the reverse is true. Everything is brand awareness. Those industries, as a general rule, are weighted closer to 80/20 long/short or brand/activation.
The differences are often based on things like lifetime value, customer stickiness, competition, and loyalty.
No matter what stage your business is in, or what industry you’re in, it’s important to realize that it’s a mix. If you’re brand new and can’t spend on brand awareness, try to set aside some money so that you can in the future to help you grow. If you’ve been using performance advertising for years and not investing in your brand, you’re leaving money on the table.
A great tool that we’ve used to determine the right mix for our clients is available here: https://www.gotracksuit.com/marketing-budget-calculator
If you’re interested in the foundational research behind the long/short ratio, we can’t recommend this book enough. – The Long and the Short of It by Les Binet